2019 (2) TMI 144 - HC - Service Tax

Attachment of petitioner s Bank Account - Section 87(b)(i) of the Finance Act, 1994 - Held that - Identical issue decided in the case of M.P. ENTERPRISES VERSUS THE UNION OF INDIA & OTHERS. 2018 (9) TMI 1520 - BOMBAY HIGH COURT , where it was held that Section 87 of the Act, can only be invoked for adopting coercive proceedings for recovery after the authorities determined the amount payable by an assesee on an adjudication order. Without adjudication, no steps for coercive recovery under Section 87 of the Act can be taken by the authorities - the impugned notice dated 30th August, 2018 issued to Union Bank of India and Axis Bank, attaching the Petitioner s Bank Account - petition disposed off.

Summary

Issues:
Challenge to notices issued by Deputy Director of GST Intelligence for recovery of Service Tax under Section 87(b)(i) of the Finance Act, 1994.

Analysis:
The Petition filed under Article 226 of the Constitution of India challenges notices dated 30th August, 2018 and 31st August, 2018 issued by the Deputy Director in the office of the Director General of GST Intelligence for the recovery of Service Tax. The notice dated 30th August, 2018 directed the attachment/freezing of the Petitioner's Bank Account in Union Bank of India and Axis Bank, as well as directing the payment into the treasury. Another notice dated 31st August, 2018 was issued to the Petitioner's customer, M/s. Motherson Sumi Systems Ltd., directing them to pay over any dues/amounts payable to the Petitioner into the treasury. These notices were issued under Section 87(b)(i) of the Finance Act, 1994.

In a related case, the High Court had passed an order in Writ Petition No. 10085 of 2018, which was on identical notices issued to the Banker of the Petitioner in that case. The Court noted that the facts and applicable law in the previous case were identical to the present case. Therefore, based on the reasons indicated in the previous order, the Court decided to quash and set aside the notice dated 30th August, 2018 in the present case as well.

Consequently, the High Court quashed and set aside the impugned notices dated 30th August, 2018 issued to Union Bank of India and Axis Bank, as well as the notice dated 31st August, 2018 issued to M/s. Motherson Sumi Systems Ltd. However, the amounts already received by the Revenue as a result of these notices were to be retained by the Respondent until the passing of an adjudication order on the show cause notice dated 8th September, 2018. The Court also clarified that the quashing of the impugned notices would not prevent the Revenue from invoking Section 73C of the Act, if deemed appropriate in accordance with the law.

Ultimately, the Writ Petition was disposed of with no order as to costs.